Developer in €20m unit buyback
THE collapsed property company behind Kilkenny's flagship MacDonagh Junction (right) expects to have to pay €20m to buy back its empty retail units in June.
The scale of the buy-backs is revealed in accounts just filed by MacDonagh Junction Developments (MDJD), which is in the process of winding itself up. The development company is backed by auctioneer Paul Newman, of Douglas Newman Good fame, and solicitor Paul Hanby.
MacDonagh Junction's retail units were sold to investors in 2007, including a Davy clients group who paid €69m for a 45.5pc stake of the shopping action. Under the terms of the deal, MDJD is mandated to buy back any retail units that remain unlet by April 2010. The buybacks must be completed by June 2010, at 2007 prices.
In notes to their latest accounts, MDJD's directors say they expect to spend €20.1m buying back those properties, even though they are "taking appropriate steps to ensure the balance of unlet units in the shopping centre are let on or before April 30, 2010".
Any units that are bought back will ultimately be bought from MDJD by Mr Hanby and Mr Newman, who have committed to buying MDJD's remaining assets so the company's creditors' can be paid a 62c in the euro dividend from the company's wind-down.
MDJD's creditors are valued at almost €22m at the end of the period, including bank loans of €11.5m, trade creditors of €5.1m and €3.9m owed to group companies. MDJD's directors say 98.24pc of its creditors agreed to the 62c-in-the-euro scheme at a creditors' meeting on July 22.
One creditor is appealing in the scheme of arrangements through court proceedings, but MDJD says it is "in the process of vigorously defending" that action.
MDJD's latest accounts also show that the company took a €15.4m impairment charge over the year ended February 2009, reflecting the challenging commercial environment.